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2022 (10) TMI 1187 - AT - Income TaxUnexplained cash credit - unexplained sources of cash deposit made during demonetisation period - failure of the assessee to satisfactorily explain cash sales - assessee is engaged in the business of wholesale and retail trading of gold bar, gold ornaments, diamond ornaments and other precious articles - HELD THAT:- There is merit in the contentions of A.R that the provisions of sec.68 can be invoked only in cases of cash credits, which were not offered as income, i.e., a legal fiction has been created in sec.68 to assess certain cash credits, which were not otherwise shown as income. In the instant case, the assessee has declared the cash sales as its income in the profit and loss account. Hence it is not a case of cash credits, which were not shown as income, in order to attract the provisions of sec.68. We notice that an identical issue has been considered in the case of Hirapanna Jewellers [2021 (5) TMI 447 - ITAT VISAKHAPATNAM] and it was decided in favour of the assessee. The books of accounts and stock register have been found to be correct by the auditors and survey officials. During the course of assessment proceedings, the AO also did not find any fault or defect in the books of accounts or stock register maintained by the assessee. The impugned deposits have been made by the assessee from the cash balance available in the books of accounts, which were duly generated on sale of goods out of stock available with the assessee. It is not the case of the AO that the purchases of stock made by the assessee and entered in the stock register were not genuine. As observed by the Visakhapatnam bench of ITAT, there is no case of making abnormal profits from the cash sales recorded by the assessee. The observations of the AO with regard to non-response by the customers to the notices issued by him and non-filing of returns by the customers are not relevant to the facts of the present case. Thus we hold that the assessee has duly explained the sources for making cash deposits into its bank account. Since the sources of cash have been generated out of business activities of the assessee, the same cannot also be assessed u/s 69A of the Act as unexplained asset - Decided against revenue.
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